Friday, June 29, 2018

Harley-Davidson Motor Cycles, Trade Wars and our Obsolete Constitution

Harley-Davidson Motor Cycles, Trade Wars and our Obsolete Constitution

Harley-Davidson Motor Cycles recently announced it will be moving some production to Europe to avoid new tariffs made in retaliation to unilateral increases in United States tariffs. Harley officials reported a $2,200 price penalty from the Trump tariff war. In spite of the abuse and ridicule from Trump, Harley-Davidson Motor Cycles did what any business has to do week in and week out; they adjusted to a change in economic circumstance. In this case Trump made a significant change in their market condition imposing tariffs with a guaranteed retaliation.

For at least 50 years the United States sent representatives to repeated meetings of the General Agreement on Tariffs and Trade(GATT) with instructions to negotiate lower tariffs and trade barriers. The world economy and companies like Harley-Davidson have adjusted completely to the lower tariffs. The Trump tariffs make American companies especially vulnerable because retaliation only affects American products made in America; every other company from every other country now has a price advantage over American companies like Harley-Davidson.

More companies will have to do what Harley-Davidson does, which will accelerate job loss in the United States. Trump remains immune to economic forecasts and market conditions while his conduct continues to be so erratic no one can predict how bad things might get.


Congress granted Presidents the dictatorial power to impose tariffs for national security reasons, but has allowed Trump to define national security as anything he wants. Congress can take the power back anytime it wants. As Trump threats and bluster translate into retaliation by other countries a weak and plaintive protest of corporate America has appeared in the media, but nothing happens about the tariffs. Corporate America appears powerless to challenge Trump, a Republican no less.

Congress can be obnoxious and threatening and make life a misery for administrators; it can stall and obstruct, but it can’t make a simple decision to stop an idiotic policy that guarantees economic loss as Harley-Davidson officials so clearly understand.

The current Trump tariff abuses highlight the workings of an obsolete constitution. The founding fathers designed a Congress with machinery designed for obstruction; very small numbers can obstruct majorities in a bicameral Congress filled with rules to block decisions. No balance of power remains among the three branches of government we all learned about in high school. The initiative and power have all passed to the President and his executive branch machinery. Anyone who doubts that should ask why corporate America with all its money bags looks at economic loss as a spectator in a brewing trade war?

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